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   Non-TechDerivatives: Darth Vader's Revenge


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From: Sam9/14/2016 6:05:53 AM
   of 2702
 
I'm not sure that this belongs on this thread, but it has to do with banking risks and it doesn't fit anywhere else, so I am putting it here for future reference.

There’s a $300 Billion Exodus From Money Markets Ahead

bloomberg.com

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From: Worswick9/27/2016 1:47:15 PM
3 Recommendations   of 2702
 
AH, YES TIME TO POST AGAIN

Deutsche Bank on the buffers.

.... it is probably time for American to again institute Marshall Plan #3.

#2 happening in 2008?

The first plan was in 1948, which dispensed the today equivalent of financial $120 Billion to aid Europe.

See: en.wikipedia.org

If my maths are right the $60 trillion in derivatives on the books of Deutsche Bank is 500 times (approximately) what the US ponied up for Europe in inflation inflation adjusted dollars, of course, for PLAN #1.

No wonder Ken Rogoff wants to do away with currency. He is a new kind of Buddhist visionary in
a HAPPY new kind of era WHERE EVERONE LIVES in Disneyland.

Best to all of you,

Clark



Is a "$46 TRILLION" Lehman Brothers Event Just Around the Corner?
DB is not alone here. Across the board, we’re getting signs of an impending banking crisis in Europe.

Credit Suisse (CS) is trading BELOW its 2012 banking crisis lows.

The EU banking system is $46 TRILLION in size. This is THREE TIMES larger than the US banking system, which nearly imploded the markets in 2008.

And the EU as a whole is leveraged at 26 to 1. Lehman Brothers was leveraged only slightly higher than
this at 30 to 1.

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To: Worswick who wrote (2668)9/27/2016 2:44:42 PM
From: ggersh
1 Recommendation   of 2702
 
Never seen it put like that, but ya it's time for Yellen to go in SWAP mode.

".... it is probably time for American to again institute Marshall Plan #3.

#2 happening in 2008?

The first plan was in 1948, which dispensed the today equivalent of financial $120 Billion to aid Europe."

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From: Worswick10/2/2016 4:31:53 PM
1 Recommendation   of 2702
 
According To JPMorgan, This Is The Biggest Risk Facing Deutsche Bank At This Point For the charts see: zerohedge.com

However, as noted previously, Lehman failed as a result of its corporate counterparties suffocating the bank by rapidly pulling out their liquidity lines. Lehman, however, was lucky in that it didn't have retail depositors: it's death would have likely come far faster as the capital panic was not limited to institutions but also included a retail depositor bank run.

This is where Deutsche Bank is very different from Lehman, and far riskier, because if the institutional panic spreads to the depositor base, which as the table below shows amounts to some €566 billion in total, and €307 billion in retail deposits...

... then all bets are off.

Which is why it is so critical for Angela Merkel to halt the plunging stock price, an indicator DB's retail clients, simplistically (and not erroneously) now equate with the bank's viability, and the lower the price drops, the faster they will pull their deposits, the quicker DB's liquidity hits zero, the faster the self-fulfilling prophecy of Deutsche Bank's death is confirmed.

Which ultimately means that DB really has four options: raise capital (sell equity, convert CoCos, which may results in an even bigger drop in the stock price due to dilution or concerns the liquidity raise may not be sufficient), approach the ECB for a liquidity bridge (this may also backfire as counterparties scramble to flee a central bank-backstopped institution), appeal for a state bailout (Merkel has so far said "Nein") or implement a bail-in, eliminating billions in unsecured claims (and deposits) and leading to a full-blown systemic bank run as depositors everywhere rush to withdraw their savings, leading to a collapse of the fractional reserve banking mode (in which there is only 10 cents in physical deliverable cash for every dollar in depositor claims).

Which of the four choices Deutsche Bank will pick should become clear in the coming days. Until it does, it will keep the market on edge and quite volatile, because as Jeff Gundlach explained today, a "do nothing" scenario is no longer an option for CEO John Cryan as the market will keep pushing the price of DB lower until it either fails, or is bailed out.

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From: Worswick10/2/2016 4:35:31 PM
1 Recommendation   of 2702
 
Deutsche Bank ’s Problems Could Snowball... As Soon As Next Week! For the charts see:

http://www.zerohedge.com/news/2016-10-02/deutsche-bank-%E2%80%99s-problems-could-snowball-soon-next-week

by Secular Investor Oct 2, 2016

Last week, the situation of Deutsche Bank kept the entire financial world busy as a $14B fine was hanging like a sword of Damocles over the company’s virtual head. We have to admit we had a good chuckle when the mainstream media were falling over themselves to report on Deutsche Bank’s problems, because most open-minded people in this sector already knew the company was one of the weakest links in the entire financial system, with the possibility to infect dozens of other players.

A weak link indeed, but most definitely not an unimportant link considering Deutsche Bank isn’t just ‘too big to fail’ but ‘waaaaay too big to be allowed fail’, and the existing problems very likely are just the tip of the iceberg. The markets were suddenly spooked by a potentially massive fine related to the sale of toxic mortgage bonds, but the concerns seemed to alleviate after the CEO of the bank published an open letter emphasizing the bank still has plenty of liquidity and reserves of in excess of 215B EUR.

It does look like the term ‘reserves’ has been used in quite a loose way, considering the majority of these so-called reserves are actually debt, and the market shouldn’t confuse ‘reserves’ with ‘liquidity reserves’. Even if you have 200B+ in liquidity, there will be a point in time when a company has to repay its creditors or refinance the existing debt, so relying on borrowed liquidity is usually just kicking the can further down the road. Indeed, after checking the H1 financial results of Deutsche Bank, the equity portion of the balance sheet is just a fraction of the 215B EUR in claimed reserves. The total shareholders equity was just 62B EUR as of at the end of June, with an equity/total assets ratio of just 3.3% compared to 12.2% at Bank of America and 12.75% at Citigroup. Even Banco Santander’s equity/total assets ratio is twice as high as Deutsche’s!

Die Zeit reported earlier this week the government and financial authorities were already preparing a rescue plan in case the bank could not meet its commitments by raising cash on the open market, because even selling the Abbey Life insurance group to Phoenix Life holdings for approximately $1.2B last week won’t move the needle in case of a huge liquidity crunch.

Indeed, the market wasn’t buying CEO Cryan’s optimistic speech, and on the open market the 6% CoCo bonds fell to less than 70 cents on the dollar, indicating a lot of debtholders wanted to get out of these CoCo’s as fast as possible, and the price of these bonds recovered slightly after the rumor about a $5.4B settlement was in the making.

Source: Telegraph.co.uk

We are uncertain about why the market thinks a $5.4B settlement would be good news. Sure, it’s less than the $14B the DoJ was originally seeking from Deutsche Bank, but even if the $5.4B number would be correct (Morgan Stanley thinks the total settlement will be closer to $6B, which we consider to be more likely considering Citigroup was slapped with a $12B fine, but settled for $7B), it would wipe out the entire provision on the balance sheet! Indeed, at the end of the second quarter of this year, the total amount of provisions on Deutsche Bank’s balance sheet was just 5.5B EUR ($6.1B), so a $6B settlement would wipe this out completely.

If you really believe a $5.4-6B settlement would solve all problems, think again. Selling toxic mortgages isn’t Deutsche Bank’s problem, but the exposure to the derivatives market is. And this problem could start snowballing, anytime now.

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From: Sam10/5/2016 11:22:20 PM
   of 2702
 
QE purchases near record even as doubts grow
Although doubts over central banks’ policies have risen, the pace of purchases is near an all-time high
YESTERDAY by: Elaine Moore

Central banks are embarking on the largest quarterly purchase of assets since quantitative easing was introduced following the financial crisis, as policymakers double down on monetary policy despite growing concern it has reached its limits.

In the final three months of the year, the UK, Japan and Europe are expected to spend a combined $506bn on assets — the largest quarterly sum created since the early days of the US Federal Reserve’s QE programme in 2009.

Figures from JPMorgan Asset Management show that rolling quarterly asset purchases have intensified after the UK’s vote leave the EU as the Bank of Englandjoins the European Central Bank and Bank of Japan in cutting interest rates and creating money to buy assets — mostly government bonds — in a bid to expand credit and spur investment.

Central bank governors including the BoE’s Mark Carney and ECB’s Mario Draghi insist QE has aided economic stability and prevented catastrophe, but the success of the scheme is contested by those who say inflation remains limp and that asset purchases have fuelled inequality, encouraged profligacy and hit the incomes of those who rely on savings.

“It is now nearly a decade since the financial crisis. In this time central banks have amassed huge balance sheets through quantitative easing and there is as yet no end in sight,” said Steven Major, global head of fixed income research at HSBC, who expects global bond yields to be no higher in 2021 than they are now.

“All the evidence suggests a long drawn-out process of deleverage. We should be thinking in terms of decades, not single years.”

While the US concluded its QE operations in 2014, the BoJ, BoE and ECB are still expanding, pushing the collective balance sheets of G4 central banks to more than $13tn.

Citi estimates that the collective balance sheets of central banks is now equal to about 40 per cent of global GDP, a move that is shrinking the universe of securities available for investment, according to credit strategist Hans Lorenzen.

continues at ft.com

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From: Worswick10/9/2016 3:05:57 PM
1 Recommendation   of 2702
 
The twilight dance hour approaches?

Deutsche Bank Tells Investors Not To Worry About Its €46 Trillion In Derivatives for the lovely charts & pictures see:

http://www.zerohedge.com/news/2016-10-09/deutsche-bank-tells-investors-not-worry-about-its-%E2%82%AC46-trillion-derivatives

by Tyler Durden Oct 9, 2016

Having first flagged Deutsche Bank enormous derivative book for the first time back in 2013, it wasn't until last week that JPMorgan admitted just what the biggest risk facing Deutsche Bank was. In a note by JPMorgan's Nikolaos Panigirtzoglou, the strategist warned that, "in our opinion it is not so much funding issues but rather derivatives exposures that more likely to trouble markets going forward if Deutsche Bank concerns continue. This is especially true if these concerns propagate into a confidence crisis inducing more rapid unwinding of derivative contracts."

For those new to the story, Deutsche has one of the world’s largest notional derivatives books — its portfolio of financial contracts based on the value of other assets. As we first noted in 2013, It peaked at over $75 trillion, about 20 times German GDP, but had shrunk to around $46 trillion by the end of last year. That’s around 12% of the total notional value of derivatives outstanding worldwide ($384 trillion), according to the Bank for International Settlements. It was €46 trillion as of Q2 measured by notional outstanding.

JPMorgan bank analysts confirmed the size of DB's book, and note that BIS data provide an alternative but indirect way to gauge the size of derivatives exposures. According to BIS data the exposure of foreign banks to German counterparties via derivatives contracts stood at $312bn as of Q1 2016.

While the topic of DB's derivative book size emerges any time the bank's stock slides, it tends to be swept under the rug whenever due to fake rumors or otherwise, the stock rebounds.

And in light of yesterday's latest news, in which Germany's Bild reported that Deutsche bank CEO John Cryan "failed to reach an agreement with the US Justice Department", it is possible that on Monday the stock will have an adverse reaction, which also means that attention will once again turn to what JPM believes is the biggest concern for investors for the world's most systematically risky bank.

So what is the embattled German lender, the same one which two weeks ago at the depth of its stock plunge blamed its woes on market " speculators", to do?

As the Chief Risk Officer Stuart Lewis told Welt am Sonntag in an interview published on Sunday, it was to take a preemptive stance on market concerns about Deutsche Bank's staggering derivative position.

Speaking to the German publication, Lewis said that Deutsche Bank continues to cut back the size of its derivatives book, "which is not as risky as investors may believe." Well, not just investors: it also includes that "other" bank with some $53.3 trillion in derivatives, JPMorgan.

"The risks in our derivatives book are massively overestimated," Lewis told the paper cited by Reuters. He said 46 trillion euros in derivatives exposure at Deutsche appeared large but reflected only the notional value of the contracts, while the bank's net exposure to derivatives was far lower, at around €41 billion.

"The 46 trillion euros figure sounds gigantic, but it is completely misleading. The real risk is far lower," Lewis said, adding that the level of risk on Deutsche Bank's books was in line with that seen at other investment banking peers. While he is largely correct about gross notional netting down to a vastly smaller number in a functioning, stable derivatives market in which there is no contagion and all counterparties continue to function during a Deutsche Bank "stress event", that assumption falls out of the window the moment a counterparty fails, and becomes even worse should any of the underlying derivative collateral be found to have been rehypothecated more than once, something not just we, but the BIS itself warned about in 2013.

But back to Deutsche Bank, whose Chief Risk Officer tried to further belay concerns of a derivative fiasco when he said that "we are trying to make our business less complex and are paring back our derivatives book. Parts of it were transferred into a non-core unit some years ago." While that is true, most of its exposure remains in the core unit (where the deposits are to be found), and what's worse, one wonders why DB hasn't had more success with derisking its gross notional derivative holdings, which still remain a substantial outlier within the European banking system.

More to the point, it is worth recalling that only two short months ago, on July 31, the same Stuart Lewis, when interviewed by Frankfurter Allgemeine said exactly the same thing, in an article titled "We are not dangerous"...

.. and promising that concern for the bank in the aftermath of the IMF report labeling it the most systematically risky bank in the world, was unfounded.

When asked if Deutsche Bank is indeed the most important net contributor to systemic risks, he replied:

“No, not at all. Only one IMF report has recently muddled up the situation: We are not dangerous. We are very relevant. Deutsche Bank is interwoven with the entire financial sector. We are one of the largest universal banks in the world. But to make it clear: Our house is stable. The balance sheet is healthy.”

When further asked if he can make this claim in good conscience, he said:

“Absolutely. Look at how we have capitalized the bank since the Financial Crisis. We have taken €115 billion in risks off the balance sheet and have €220 billion of liquidity. Concern for us is unfounded.”

Two months later it turned out that concern for us was, in fact, "founded."

Amusingly, when Wolf Richter pointed out Lewis' comments, he noted that "wisely, Deutsche Bank’s elephantine exposure to derivatives didn’t even come up. It’s better to silence the topic to death than to cause a panic with it."

Now, just over two months later, the topic has come up, and this time Stuart Lewis is scrambling to preempt concerns about the dozens of trillions in derivatives, using the same exact rhetoric: please ignore the elephant in the room; Deutsche Bank is fine.

But the biggest irony from Lewis' August appeal to investors was the following: “The good news is: the taxpayer does not have to step in; according to the new regulations for banks, bondholders will get hit first.” If anything, events over the past two weeks confirmed that this will not happen.

* * *

Still, perhaps an even more important story ahead of Monday's open is not Deutsche Bank's latest attempt to ease investor concerns about its balance sheet and trillions in derivatives, but Friday's report that global banking regulators are sticking to their guns on capital standards in the face of intense European pressure to soften planned rule-changes.

As Bloomberg reported on Friday, the Basel Committee on Banking Supervision will wrap up work on the post-crisis capital framework, known as Basel III, on schedule by the end of the year, William Coen, the regulator’s secretary general, said on Friday. Key elements criticized by European Union policy makers will be retained, according to the text of Coen’s remarks in Washington.

One flashpoint is a proposed new capital floor that caps the benefit banks can gain by measuring asset risk using their own models compared with a formula set by regulators. Coen said “discussions are still under way” on the floor, though Valdis Dombrovskis, the EU’s financial-services chief, called last month for it to be scrapped.

What this means is that as it wraps up Basel III, the regulator is under instructions not to increase overall capital requirements significantly in the process. That promise, first made in January, left open the possibility that individual countries or banks could face a marked increase.

“This is not an exercise in increasing regulatory capital requirements,” Coen said. “However, this does not mean that the minimum capital requirement for all banks will remain the same; variability in risk-weighted assets can only be reduced if there is some impact on the outlier banks.

So some banks which are genuinely outliers may face a significant increase in requirements as a result.”

Banks such as Deutsche Bank, which while not named can be inferred: among the most vocal opponents to a boost in overall capital levels is German Finance Minister Wolfgang Schaeuble who has insisted that the Basel Committee not only keep any overall increase in capital requirements to a minimum, but also ensure the rules have no “particularly negative consequences for specific regions,” such as Europe. Or rather, Germany.

In the current round of talks, Europe and Japan are keen to retain risk-sensitivity in the capital rules, including the use of models where appropriate. The European Commission, the EU’s executive arm, doesn’t believe capital floors are an “essential part of the framework,” Dombrovskis said. Europe also opposes the Basel Committee’s proposal to bar some asset classes from modeling entirely, and objects to the calibration of risk-weights in the standardized approach to credit risk.

Why is Europe, and its biggest bank, "keen" on retaining the existing model-based framework which would not require substantial capital increases for risky banks, of which Deutsche Bank is at the very top?

Simple: the largest German lender is already notably undercapitalized, and any further capital needs would only lead to further pressure on its stock, forcing it to seal even more equity when the inevitable capital raising moment arrives; it also means that the models used by DB's risk managers are likely to materially misrepresent the bank's true value at risk, not only when it comes to its loan book, and especially Level II and III assets, but more importantly, its derivative book, where while we appreciate

Mr. Lewis' assertion that the bank's €46 trillion in gross notional derivatives collapse to just €41 billion, we would be far more interested in seeing the

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From: Worswick10/16/2016 3:37:00 PM
1 Recommendation   of 2702
 
The dollar the now most fungible financial instrument ... for a bit anywhere ....

The (Dollar) Straw That Breaks The Camel's Back Of Political Correctness



by Tyler Durden
Oct 16, 2016 1:01 PM

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Submitted by Eugen von Bohn-Bawerk via Bawerk.net,

One year ago we showed the following chart to explain the relative strong dollar that was on everyone’s mind at the time. With a second leg higher in the US dollar imminent, this particular chart will be more important than ever. Claims to dollars, such as demand and time deposits, or even more opaque money-like products created by the shadow banking system is just that, a claim or derivative on the final mean of payment, namely base money. When trust breaks down and owners of dollar claims rush to exchange them for actual dollars, the price of dollars goes up in relation to goods and services because there are not enough dollars to satisfy all the claims outstanding.

In monetary terms deflation takes hold and there are no market mechanism that can clear this anomaly (because it was never a proper market to begin with) as the price of the underlying and the derivative will move in perfect proportion to each other. Enter the Federal Reserve with their QE programs, id est base money creation, to meet dollar demand and stem the ensuing panic.

Unfortunately, something even more sinister has been going on with dollar derivatives internationally. In addition to domestic claims to dollars, there are a massive market for dollars internationally called Eurodollars. Foreign banks, particularly European banks, help global investors, merchants, exporters and importers trade and settle in USD, with very few actual dollars present. As long as everybody trust each other, this highly efficient system can operate smoothly with a high degree of leverage. Money market funds and filthy rich commodity exporters have a long tradition for placing their money in these markets allowing the financial system to benefit greatly.



In every over-leveraged system, small changes can have great ripple effects. Money market reform fully implemented last week forced money markets to float their NAV and implement liquidity fees and suspension gates as means to prevent a run on the fund; unless these are invested in government securities of course. If they do, the new rules do not apply. Therefore, it is of no surprise that money has rushed out en masse from prime funds and subsequently into government money market funds. Implementation of the new rules happened just as oil exporters from the Middle East and other SWFs had to pull out from money markets to fund rapidly rising twin deficits. The result has been a notably increase in the TED spread, signalling scarcity in available dollar funding internationally.

Troubled banks, like Deutsche Bank and the rest of its brethren in Europe, undercapitalized, burdened by an overzealous DoJ with a “you-tax-Apple-we-take-down-your-banks” attitude and funded mostly by AT1 CoCo bonds have felt the effects of higher funding costs more than any. A scramble for dollars are likely to ensue when one of the European behemoths fall.



The USD is coincidentally perfectly positioned for a breakout from an increasingly narrow channel. Last year, in November of 2015 it broke out from a similar channel on back of rational asset allocation based on the upcoming Federal Reserve rate hike in December of that year. Further four hikes were communicated in 2016, but so far none as materialized. The USD thus fell back into a new channel. This time it will be pushed up, not from rational expectations of more favorable yield differentials, but from fear as dollar scarcity increases. The Fed may or may not raise rate in December, we do not care much as the US is heading straight into recession (as we have warned here several times) and that is when the stampede will begin in earnest.



A massively overleveraged financial system is once again on the brink. All it take is a second leg higher in the USD and European banking is dead in the water with monstrosities like Deutsche Bank being one of the most interconnected institutions on the planet. Knock-on effects on the global economy will be severe as dollar funding dries up. The USD SWAP line between ECB and the Federal Reserve will quickly reach a trillion dollars and the newly elected US Congress will throw hissy-fits as they are essentially asked to bail out the international Eurodollar market.

Political risk in Europe are on the rise as the once prosperous middle class are forgotten, both financially (cannot compete with low cost Chinese workers) and culturally (if you do not like what is happening to your neighborhood you are a deplorable and irredeemable racist bigot and we do not need to listen to you).

Losing life savings as deposits are bailed in left and right will be the straw that bring down any pretense of political correctness.

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From: Sam12/15/2016 10:42:23 AM
   of 2702
 
U.S. banks must pay up to $2 bln more per year to shield Wall Street -Fed
REUTERS 10:40 AM ET 12/15/2016

Symbol Last Price Change
56 +1.3 (+2.38%)
86.059 +1.329 (+1.57%)
23.12 +0.45 (+1.99%)
60.16 +0.71 (+1.19%)
80.08 +0.7 (+0.88%)
48.48 +0.41 (+0.85%)
43.171 +0.311 (+0.73%)
243.955 +4.025 (+1.68%)
QUOTES AS OF 10:40:32 AM ET 12/15/2016


WASHINGTON, Dec 15 (Reuters) - The largest U.S. banks will have to pay as much as $2 billion more a year to insure against a future market collapse, the U.S. Federal Reserve said on Thursday, as it outlined a new rule designed to further protect the financial system.

The rule demands Wall Street holds more debt that could be converted to shareholder equity if a bank is pushed to bankruptcy. Investor-owned stock is the main buffer against a bank failure.

Half of the eight largest U.S. banks would need to issue roughly $50 billion in fresh debt to satisfy the new standard, known as Total Loss Absorbing Capacity (TLAC), according to Fed estimates.

Taken together, the eight banks' overall annual funding costs are set to increase by between $680 million and $2 billion, the Fed has said.

Fed officials declined to identify the four banks that lack sufficient debt. Wells Fargo & Co(WFC) said in November it envisioned issuing at least an additional $29 billion in debt to satisfy the rule.

Large banks were already making significant strides to satisfy the new rule, Fed officials said.

The final rule issued on Thursday largely upholds a draft issued early this year, but with a few concessions to the industry.

Much existing debt will be counted towards satisfying the new rule, the Fed said, a process known as 'grandfathering'.

"This grandfathering should significantly reduce the burden of complying with the requirements," the Fed said in a statement.

Besides Wells Fargo(WFC), the banks expected to satisfy the new rule are JPMorgan Chase & Co(JPM), Bank of America Corp(BAC) , Citigroup Inc(C), State Street Corp(STT), Bank of New York Mellon Corp(BK), Morgan Stanley(MS) and Goldman Sachs Group Inc.(GS)

Some of the largest subsidiaries of foreign banks must also satisfy TLAC. (Reporting By Patrick Rucker in Washington; Additional reporting by Dan Freed and David Henry in New York; Editing by Bill Rigby)

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From: Worswick2/3/2017 10:13:16 AM
   of 2702
 
I must say having posted hundreds of times on this Blog since it's beginning 19 years ago ....it has been very difficult to connect the daisy chains of failure to their source and beyond ...

It is a cataclysm of effect .

Well .... here it is ....



Derivatives.....the ticking financial time bomb!
written by HoHo the bumbling idiot. , January 21, 2017

A LETTER TO THE EDITOR ….

See: http://www.alt-market.com/articles/3109-trump-dump-coming-to-the-stock-market

HoHo ( the bumbling idiot ) in the house...

So here we are 89 years after the kick off of Black Tuesday October 1929.

Three years later the stock market lost a cumulative 90%. And the Gates of the Depression opened up for business.

Today we are in a parallel universe, the global debt build up, record margin and market manipulations unimaginable 89 years ago. Derivatives or gambling bets are approximately hovering at 287 $Trillion Dollars in the US by the 6 largest banks.

These banks use their balance sheets which include all the depositors cash which pays them 0% interest for the privilege of having a seat at the largest Poker table in the world. However the depositors do not reap any of the wins and only are exposed to absolute loss if the banks lose. Yes, you heard me right....there really is no FDIC at these 6 large US banks. You say to your self, how could that be?!...there are those official looking FDIC plaques proudly displayed when I visit my local Citibank?

Well children, the fact of the matter is: "there is no Santa Claus"

Let me explain...but first turn off Dancin’ with Stars, Monday night football and other opiate mind numbing diversions, please... The Dodd Frank Laws as of 2010 No longer allow for Bailouts(by the taxpayer) via the US Treasury Dept. of failing banks that are gambling in multi-trillion derivative bets that leverage their balance sheets on the order of 40-50 to 1.

What the law does provide for however is a benign sounding term namely "Bail Ins."

Well let me explain what a Bail In is and how it will impact those FDIC protected depositors at those very large 6 systemically important banks. A bail in is simply this: CitiBank has approx. 59 Trilllion$ of derivative bets against 2.2 Trillion dollars of value on their balance sheet. (much of which is the depositor cash base earning .01%)

Let's say, for example, they have taken bets that are highly leveraged say on certain banks in Europe will not fail.....but then out of the blue on a beautiful late Friday afternoon Deutsche Bank's doors close due to systemic failure.

Well someone is going to lose and someone is going to win that bet.

And remember there are thousands of counter bets against these exponential bets. But rather than get too complicated, lets just cut to the chase, CitiBank say loses $1.5 trillion on this European bank failure bet and creates an insolvency problem for themselves.....

Well this time the Treasury will not bail out the bank, due to the law, remember Dodd Frank, and please pay attention, not Rick Perry, our new energy secretary, dancing with Beyonce on Dancing with the Stars.



Next step. The Bank will have to Bail itself In.


According to the GSIFI rules and regulations put into affect December 2012 by the FDIC, the bank is now permitted to write off all it's debts down to 0$ ie. senior corp bonds issued and all it's unsecured creditors.


BTW the largest class of unsecured creditors is .....yes...depositors.

Imagine that, you thought that when you deposit your cash into the bank it is FDIC insured up to $250K. It might as well be $1 million dollars FDIC this dollar amount is now meaningless. By the way the GSIFI rules also state that if a bail in is executed by your illustrious bank(that may even sponsor golf tournaments at pebble beach) they must exchange your confiscated deposit with a newly issued stock certificate in the new zombie bank.

Now go try to sell that or as they say on Wall Street hit the bid! Wow, can you imagine the SHTF moment when one of these casino banks fails?!!! I was just reminiscing when Bernie Sanders was making all those crazy comments regarding banks during his campaign. Remember his warnings regarding these Casino Banks and how they need to be regulated and the Glass Steagal laws that need to be reinstated & reinforced. This law basically would re-separate the traditional banks from the investment bank gambling houses. (kind of like removing a vampire from it's victim)

This is a sick parasite system around the world where an estimated one Quadrillion dollars (that's one thousand Trillion dollars) amount of derivatives are on the books of very large banks like Deutsche Bank, HSBC, BofA, Citi, Credit Suisse and more!!! While the world watches Dancing with the Stars, Sports in the Gladiator Colosseum and those mean dispirited ISIS Terrorists......


Big Trouble is baking uncontrollably in our esteemed Banking Institutions. Why do our politicians continue to talk about terrorists and other diversions when they know the Biggest problem are these derivatives.


Answer- because they are held hostage and they have allowed themselves to be duped into such a precarious and vulnerable position by these investment banks around the world. Think about it why did the ECB bail out Greece multiple times. And are now terrified that Britain will finally exit the EU, and France, and Italy and the Netherlands and later Germany??? The answer is the Derivative bets and their destructive outcome.

These Weapons of Mass Financial Destruction are about to be unleashed and daisy chain globally.

Now I understand what it would of been like on the promenade deck of the Titanic as it sailed directly towards the Icebergs after being warned several times of the impending danger. But for the sake of making a worlds speed transatlantic record full stimulus ahead, pour me another glass of champagne and let the music continue the promenade deck.


Oh it's a commercial break on dancing with the stars........when we return Rick Perry will perform the Charleston with Beyonce 1929 style!


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